Sultan Singh, J.
1. The question involved in this appeal is whether 'Inam' paid by M/s. Pratap Name Lables Factory-respondent to his employees is wages within the meaning of 'The Employees' State Insurance Act, 1948 (hereinafter called 'the Act') and whether any contribution is payable on it by the employer. Briefly the facts are that the respondent firm a partnership concern is engaged in the manufacture of woven labels employing more than 20 persons registered under the Factories Act. The said Act is applicable to the factory of the respondent. The respondent started the factory in 1956. The normal average production of each workman employed by the respondent per eight hours a day is 51/2 metre woven labels. Since the year 1965 it was agreed between the workman and the respondent that each workman who gives production more than 51/2 metre in a day would be paid 'Inam' at the rate of 75 paise per metre. The 'Inam' was being accordingly paid by the respondent to his employees. The Employees State Insurance Corporation by letter dated 1st December, 1970 asked the respondent to pay the Employers Special Contribution. The respondent submitted that the 'Inam' paid to the workmen was not the condition of service and was not wages within Section 2(22) of the Act. The Employees State Insurance Corporation did not agree with the submission of the respondent. An application under Section 75 of the Act was filed by the respondent for a declaration that the 'Inam' paid to the workmen of the factory was not wages. The Employees Insurance Court by the impugned judgment and order held that'Inam' paid to the workers by the respondent concerned was not wages under the Act. The court relied upon Braithwaite and company (India) Ltd. v. The Employees' State Insurance Corporation, : (1968)ILLJ550SC wherein it was observed that the payment of 'Inam', though remuneration, was not wages within the meaning of the Section 2(22) of the Act.
2. Learned counsel for the Employees State Insurance Corporation submits that the Inam paid by the respondent to the workers of his factory is wages within the meaning of Section 2(22) of the Act. He submits that the facts of the said Supreme Court judgment were not applicable to the facts of the present case. Section 2(22) of the Act defining the word 'wages' reads as under:
'2. In this Act, unless there is anything repugnant in the subject or context :--
XX XX XX (22) 'Wages means all remuneration paid or payable in cash to an employee, if the terms of the contract of employment, express or implied, were fulfillled and includes any payment to an employee in respect of any period of authorised leave, lock out, strike which is not illegal or lay off and other additional remuneration if any paid at interval not exceeding two months, but does not include :
(a) any contribution paid by the employer to any pension fund or provident fund, or under this Act:
(b) any traveling allowance or the value of any traveling concession ;
(c) any sum paid to the person employed to defray special expenses entailed on him by the nature of his employment or
(d) any gratuity payable on discharge :'
There are three parts of the definition. The first part of the definition shows that in order to be treated as 'wages', the payment should be cash remuneration and it should be paid or payable if the terms of the contract of employment, express or implied were fulfillled. The second part of the definition shows that additional remuneration, if any, paid at the intervals not exceeding two months is also wages. The last part of the definition mentions the items which are not wages within the meaning of the Act. In Braithwaite and Co. (India) Ltd. (supra) before the Supreme Court the payment of this Inam was not enforceable as one of the terms of the contract of employment, whether implied or express and thereforee it was held that the payment of 'Inam' was not a term of contract of employment and as such not wages within the meaning of Section 2(22) of the Act. The Employees Court Insurance thereforee made a wrong approach in holding that Inam was not wages on the basis of the said Supreme Court judgment. In the instant case the payment of Inam was not a term of the original contract of the employment. But it is admitted that in 1S65 there was an agreement between the respondent and the workman for payment of the Inam. Merely because the agreement for payment of Inam is not the term of original contract it cannot be said that it is not remuneration paid or payable in fulfillment of the terms of the contract of employment express or implied. The payment of Inam pursuant to scheme and agreement between the respondent and his workers is a reward or prize to be paid for the work done by the workers as such it must be held to be a remuneration. Under the first part of the definition of the word 'wages', only two things are required ; (i) whether the payment was remuneration and (ii) whether there was express or implied contract for its payment. In the present case both the conditions are fulfillled. The respondent in his application admits that there was agreement with the workmen for the payment of Inam. In other words the payment of Inam was enforceable under the terms of the contract. It is immaterial that the agreement for payment of Inam was not a term of the original contract of employment. I, thereforee, hold that Inam paid by the respondent to his employees in pursuance of the agreement arrived at in 1965 between the workmen and the respondent is wages within the meaning of Section 2(22) of the Act. It was pleaded by the respondent in his application that he reserved the right to withdraw the same altogether without assigning any reason or to revise its condition at its sole discretion. There is no evidence by the respondent in support of his plea. In any case if the Inam had become a condition of the contract of employment, the employer could not withdraw that right in his discretion without assigning any reason nor could the employer vary its condition without agreement from the employees concerned. In The Regional Director, E.S.I.C. Hyderabad v. The Hyderabad Asbestos Cement Products Ltd., Hyderabad, 1977 L I C 313 it was held that the payment of production bonus pursuant to Memorandum of Settlement between the Management and the workmen was wages within the meaning of Section 2(22) of the Act. It was also held that it was immaterial that the agreement of payment of bonus was not a term of the original contract of employment. Similarly in Reyrolle Burn Ltd. v. E.S.I.C. and Anr., 1980 (1) L L J 30 it was held that incentive bonus payable in terms of an agreement was binding between the parties and that it was wages within the meaning of Section 2(22) of the Act.
3. I am thereforee of the view that the Employees Insurance Court fell into error in holding that Inam paid by the respondent to his workman was not wages. The payment of Inam by the respondent to his employees is wagci within the Section 2(22) of the Act and that the respondent is liable topay Employer's Special Contribution under the Act. The appeal is accepted setting aside the impugned order dated 24th March, 1972. The respondent has not appeared to contest this appeal and thereforee the parties are left to bear their own costs.